Fresenius Medical Care starts the year with strong earnings growth
- Solid revenue1 growth of 4% driven by both segments Care Delivery and Care Enablement
- Operating income1 margin improved in both segments
- Care Enablement delivered strong sequential margin improvement with significant progress towards the 2025 target margin band
- Execution of transformation continues at pace, contributing additional FME25 savings of
EUR 52 million - Portfolio optimization program progresses in Care Delivery with signed or closed divestments in all our Latin American markets, and closed divestments in Turkiye and of
Cura Day Hospitals Group inAustralia - FY 2024 outlook confirmed
BAD HOMBURG,
"The first quarter of this year demonstrates that we are executing on our strategy as planned. Both segments expanded their respective margins compared to the prior year. Especially for Care Enablement, the first quarter was an inflection point as our transformation efforts, higher pricing and FME25 savings drove a solid margin improvement. We are also executing with speed our strategic portfolio optimization program. We have started the year with a slightly more favorable operating income phasing than planned and confirm our financial outlook for the full year 2024. We would not be here without the great work of our employees, whom I would like to thank for their hard work and dedication."
Key figures (unaudited) |
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Q1 2024 |
Q1 2023 |
Growth |
Growth |
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EUR m |
EUR m |
yoy |
yoy, cc |
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Revenue |
4,725 |
4,704 |
0 % |
+2 % |
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on outlook base1 |
4,822 |
4,619 |
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+4 % |
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Operating income |
246 |
261 |
-6 % |
-4 % |
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on outlook base1 |
416 |
338 |
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+23 % |
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Net income 2 |
71 |
86 |
-18 % |
-17 % |
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on outlook base1 |
198 |
146 |
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+35 % |
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Basic EPS (EUR) |
0.24 |
0.29 |
-18 % |
-17 % |
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on outlook base1 |
0.67 |
0.50 |
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+35 % |
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yoy = year-on-year, cc = at constant currency, EPS = earnings per share |
Focused execution against the strategic plan continues into 2024
Moreover,
After further signing the divestments of its dialysis clinic networks in
Revenue development driven by solid organic growth
Revenue remained almost unchanged with
Care Delivery revenue increased by 1% (+3% at constant currency, +6% organic) and by 5% on outlook base1.
In Care Delivery
In
Care Enablement revenue declined by 1% (+1% at constant currency, +2% organic), while they grew by 2% on outlook base1. Positive impacts from pricing were offset by negative exchange rate effects and negative volume growth compared to prior year, in the absence of sales of critical care products in
Within Inter-segment eliminations, revenue for products transferred between the operating segments at fair market value remained stable at negative
Better than expected earnings development driven by phasing of value-based care business
Operating income decreased by 6% to EUR 246 million (-4% at constant currency), resulting in a margin of 5.2% (Q1 2023: 5.5%). Operating income on outlook base1, i.e. at constant currency, excluding special items and the business impacts from closed divestitures during 2023, increased by 23% to
Operating income in Care Delivery decreased by 34% (-34% at constant currency), resulting in a margin of 5.0% (Q1 2023: 7.6%). Operating income on outlook base1 increased by 25%, resulting in a margin of 9.3% (Q1 2023: 7.8%). The operating income development was driven by positive effects from pricing, the value-based care business and FME25 savings, while expected labor and inflationary cost increases impacted the earnings development.
Operating income in Care Enablement amounted to
Operating income for Corporate amounted to
Net income 2 decreased by 18% to EUR 71 million (-17% at constant currency). Net income on outlook base1 increased by 35%.
Basic earnings per share (EPS) decreased by 18% to
Strong cash flow development
In the first quarter,
Free cash flow4 amounted to
Outlook
The expected growth rates for 2024 are at constant currency, excluding special items as well as the business impacts from closed divestitures in 2023 and the settlement agreement with the
The Company also reconfirms its targets to achieve an operating income margin of 10% to 14% by 2025. This excludes impacts from portfolio changes.
Patients, clinics and employees
As of
Conference call
Please refer to our statement of earnings included at the end of this news and to the attachments as separate PDF files for a complete overview of the results of the first quarter of 2024. Our 6-K disclosure provides more details.
About
For more information visit the Company's website at www.freseniusmedicalcare.com.
Disclaimer:
This release contains forward-looking statements that are subject to various risks and uncertainties. Actual results could differ materially from those described in these forward-looking statements due to various factors, including, but not limited to, changes in business, economic and competitive conditions, legal changes, regulatory approvals, impacts related to the COVID-19 pandemic results of clinical studies, foreign exchange rate fluctuations, uncertainties in litigation or investigative proceedings, and the availability of financing. These and other risks and uncertainties are detailed in Fresenius Medical Care's reports filed with the
1 |
Revenue and operating income outlook, as referred to in the 2024 outlook, are both at constant currency, excluding special items as well as the business impact from closed divestitures in 2023 and the settlement agreement with the U. S. government (Tricare) in Q4 2023. For FY 2023 and 2024, special items include costs related to the FME25 program, the Humacyte remeasurements, the legal form conversion costs and effects from legacy portfolio optimization. For further details please see the reconciliation attached to the Press Release. |
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2 |
Net income attributable to shareholders of |
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3 |
The Company transfers products between segments at fair market value. The associated internal revenues and expenses and all other consolidation of transactions are included within "Inter-segment eliminations". |
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4 |
Net cash provided by / used in operating activities, after capital expenditures, before acquisitions, investments, and dividends |
Statement of earnings |
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Three months ended |
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in € million, except share data, unaudited |
2024 |
2023 |
Change |
Change |
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Revenue |
4,725 |
4,704 |
0.4 % |
2.5 % |
Revenue (outlook base)1 |
4,822 |
4,619 |
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4.4 % |
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Costs of revenue |
3,551 |
3,555 |
-0.1 % |
1.9 % |
Selling, general and administrative expense |
776 |
782 |
-0.8 % |
0.7 % |
Research and development expense |
48 |
56 |
-14.3 % |
-13.9 % |
Income from equity method investees |
(29) |
(28) |
4.8 % |
4.8 % |
Other operating income |
(113) |
(117) |
-3.4 % |
-3.9 % |
Other operating expense |
246 |
195 |
26.2 % |
30.5 % |
Operating income |
246 |
261 |
-5.7 % |
-4.4 % |
Operating income (outlook base)1 |
416 |
338 |
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23.0 % |
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Interest expense, net |
88 |
83 |
6.8 % |
9.1 % |
Income before taxes |
158 |
178 |
-11.5 % |
-10.6 % |
Income tax expense |
40 |
45 |
-11.2 % |
-10.8 % |
Net income |
118 |
133 |
-11.6 % |
-10.6 % |
Net income attributable to noncontrolling interests |
47 |
47 |
-0.3 % |
0.9 % |
Net income 2 |
71 |
86 |
-17.8 % |
-16.9 % |
Net income2 (outlook base)1 |
198 |
146 |
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35.3 % |
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Weighted average number of shares |
293,413,449 |
293,413,449 |
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Basic earnings per share |
€0.24 |
€0.29 |
-17.8 % |
-16.9 % |
Basic earnings per share (outlook base)1 |
€0.67 |
€0.50 |
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35.3 % |
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In percent of revenue |
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Operating income margin |
5.2 % |
5.5 % |
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Operating income margin (outlook base)1 |
8.6 % |
7.3 % |
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1 Outlook base as referred to the 2024 outlook, presented at constant currency, excluding special items, business impacts from closed divestitures in 2023 and the Tricare settlement in Q4 2023. For a reconciliation please refer to the table at the end of the press release. |
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2
Attributable to shareholders of |
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Reconciliation of non-IFRS financial measures to the most directly comparable IFRS Accounting Standards financial measures for comparability with the Company´s outlook (outlook base) |
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Three months ended |
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in € million, unaudited |
2024 |
2023 |
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Operating performance ( outlook base ) |
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These items are excluded to ensure comparability of the figures presented with the Company's financial targets which have been defined excluding special items and at constant currency. |
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Revenue |
4,725 |
4,704 |
Divestitures 1 |
— |
(85) |
Revenue excl. 2023 divestitures |
4,725 |
4,619 |
Currency translation effects |
97 |
— |
Revenue (outlook base) |
4,822 |
4,619 |
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Operating income |
246 |
261 |
FME25 Program |
28 |
26 |
Legal Form Conversion Costs |
1 |
2 |
Legacy Portfolio Optimization 2 |
143 |
84 |
Humacyte Remeasurements |
(15) |
(19) |
Sum of special items |
157 |
93 |
D ivestitures 1 |
— |
(16) |
Sum of special items and 2023 divestitures |
157 |
77 |
Operating income excl. special items and 2023 divestitures |
403 |
338 |
Currency translation effects |
13 |
— |
Operating income (outlook base) |
416 |
338 |
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Net income 3 |
71 |
86 |
FME25 Program |
20 |
20 |
Legal Form Conversion Costs |
1 |
1 |
Legacy Portfolio Optimization 2 |
107 |
61 |
Humacyte Remeasurements |
(11) |
(14) |
Sum of special items |
117 |
68 |
Divestitures 1 |
— |
(8) |
Sum of special items and 2023 divestitures |
117 |
60 |
Net income3 excl. special items and 2023 divestitures |
188 |
146 |
Currency translation effects |
10 |
— |
Net income 3 (outlook base) |
198 |
146 |
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1 Business impacts from closed divestitures in 2023. |
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2
2024: mainly comprise the impairment of intangible and tangible assets resulting from the measurement of assets held for sale (primarily |
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3 Attributable to shareholders of FM E AG . |
Media contact
T +49 160 60 66 770
christine.peters@freseniusmedicalcare.com
Contact for analysts and investors
Dr.
T +49 6172 609 2601
dominik.heger@freseniusmedicalcare.com
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